Electronic commerce (E-commerce) has gained significant attraction as it provides a way to become independent from cash. To adequately replace cash, three basic services have to be provided by an E-commerce system: retrieving money from a bank account into an electronic purse, paying with the money from the electronic purse, and transferring money from one electronic purse to another electronic purse. The latter service is also known as a peer-to-peer transaction. An electronic purse can be implemented as an electronic payment device like a smart card or a mobile phone.
The public acceptance of E-commerce will further grow if electronic payment mechanisms with services as described above will be further developed to ensure and to enhance security aspects and availability aspects. Security aspects cover all items related to transferring or exchanging of financial value over insecure transaction paths, e.g. open networks like the Internet or fixed or wireless telephone networks, and to prevent an E-commerce system from fraud, e.g. by tampering electronic payment devices or automatic teller machines (ATMs). Availability aspects are aiming for E-commerce systems providing services being accessible from a maximum number of locations and ideally at any time with special emphasis on compatibility, e.g. of the payment services or payment devices. In addition, a status information about the financial transaction should be accessible to all parties involved, ideally immediately after the payment has taken place. Implementation of E-commerce services within a mobile communication network, e.g. the Global System for Mobile communication (GSM), is known as mobile E-commerce or M-commerce.
Electronic payment systems known so far provide the functions retrieving money from a bank account and paying. The service of peer-to-peer transactions is implemented into some E-commerce systems already. However, the peer-to-peer transaction functionality imposes strong requirements on the system in order to ensure security and availability and the payment procedure is still very laborious.
A smart card based payment system implementing the concept of an electronic purse with peer-to-peer functionality is Mondex (see http:\\www.mondex.com). The owner of such a card may reload it at an ATM or via phone and later spend the money either in a shop or transfer financial value directly to another Mondex card. As in the case of cash, electronic money can be transferred between an unlimited number of cards. However, the fundamental problem with Mondex-like implementations is that is impossible to trace fraud in the case someone is capable of generating electronic money on a smart card.
An application of E-commerce is home or online banking. It provides a user access to banking functions via a personal computer (PC) or a smartphone with chip card reader connected to the banking server via the Internet or a telecommunication network. Among other two-party applications, e.g. bank account monitoring, electronic payment transactions from a bank account of a payer to a bank account of a payee can be conducted. For this case, the user acting as payer contacts his banking server and provides the bank with data comprising e.g. name, bank identifier and account number of the recipient of the financial transfer and the amount of money to be transferred. The payer activates the payment transaction and after successful verification of the user's authentication, the bank executes the payment transaction and generates a payment confirmation for the payer.
In order to achieve a high level of security and compatibility, common standards for online banking emerge. An example is the Home Banking Computer Interface (HBCI) which is nowadays the de-facto standard for online banking in Germany. The HBCI-based home banking application uses the European Conference of Posts and Telecommunications (CEPT) protocol and Einheitliche Höhere KommunikationsProtokoll (EHKP) as transport frame for transparent data up to 1600 Byte accompanied by Bildschirmtext File Interchange Format (BtxFIF) for data larger than 1600 Byte. For Internet clients, HBCI additionally uses the Transmission Control Protocol/Internet Protocol (TCP/IP). TCP-Port 3000 serves as interface between application and communication. HBCI utilises a data format based on the United Nations Electronic Data Interchange For Administration, Commerce and Transport (UN/EDIFACT) which is used also for internal data transfer at the banks.
A benefit of HBCI is its high level of end-to-end security even over an open network as the Internet, because the HBCI standard fulfils the requirements of authentication of the user to the user terminal, e.g. by entering a password, mutual authentication of the user terminal and the banking system, non-repudiation of origin, integrity, encryption, and validity check in order to prevent a replay attack. Two different security solutions are offered in HBCI: the first one is a method named DES-DES-Verfahren (DDV) based on a symmetric Data Encryption Standard (DES) method employing a chip card. The second solution is the RSA-DES-Verfahren (RDV) based on an asymmetric Rivest, Shamir and Adleman (RSA) algorithm. In the DDV solution, an electronic context signature is established in detail by first hashing the message via 160-bit cryptographic hash function (RIPEMD-160), followed by a padding of the hash value to a length equalising the next multiple of 8 byte by adding “00”, and finally building a retail Cipher Block Chaining Message Authentication Code (CBC-MAC) according to American National Standards Institute (ANSI) X9.19 standard using the 2-Key-Triple DES encryption method. In the RDV solution, the electronic signature is established by the same hashing procedure as in DDV. In addition, the hash value is formatted and finally signed via RSA algorithm following International Standards Organization (ISO) 9796:1991 standard. Encryption of the message content is achieved in both security solutions via 2-Key-Triple-DES according to ANSI X3.92 standard using a specific session key. For each message, a new session key is generated dynamically by the sending system. The session key itself is encrypted according to DDV or RDV and accompanies each message. At the receiving party, the authentication takes place by checking the electronic signature with the secret or public key of the sending party according to DDV or RDV, respectively. Validity is achieved via the implementation of a sequence counter in the banking system as well in the user terminal combined with a history function, e.g. a list of previously executed sequences.
Another online or home banking standard is the Interactive Financial eXchange (IFX) standard customised for the American market. IFX originates from the Open Financial eXchange (OFX) and Gold standard. In IFX, the data format is eXtensible Markup Language (XML) and transport protocols employed are TCP/IP, Hypertext Transfer Protocol (HTTP), System Network Architecture (SNA), and XML. Security is ensured via authentication mechanisms on the server and cryptography method is via Secure Sockets Layer (SSL) and Personal Identification Number (PIN).
Beside its major advantages of providing a high degree of availability and security, online banking remains up to now a two-party process because it does not directly involve the payee. This party is generally not informed about a payment transaction nor the status and has to contact its bank for checking if a payment transaction has been conducted. Another drawback is that the time needed for the bank to credit the money to the account of the payee can last up to several days or even more. This long time delay makes this payment method inconvenient for peer-to-peer functionality in E-commerce especially for the payee.
An alternative approach of an electronic purse offering peer-to-peer transactions is provided by paybox (see http:\\www.paybox.de). In this E-commerce payment system, the payer utilises a mobile phone connected to a mobile telephone network to enable financial transactions with a payee, e.g. Internet-merchants, stationary retailers, mobile service providers, and end-consumers. The E-commerce payment system provider is involved in the financial transactions and acts as trusted third party. This system uses existing payment schemes, e.g. payment by direct debit including direct debit authorisation, and combines this method with a confirmation function simultaneously provided to the participants via mobile phone. The handling of payments is carried out by a financial service company, which is accredited to conduct said financial transactions, e.g. a bank. For gaining access to the full set of offered services including peer-to-peer financial transactions, the payer must be fully registered to said E-commerce payment system.
Although the use of a mobile phone as payment device in combination with a mobile communication network and a trusted third party provides a substantial improvement with respect to both, availability and security aspects, such E-commerce payment systems have some limitations: the payer has to call the payment system provider and to manually type in authorisation data and payment relevant data of the payer and the payee necessary to execute the payment transfer. This manual interaction is time consuming and susceptible to errors. Fees are charged by the operator of the mobile network for the complete duration of the mobile connection thus producing high cost per payment transaction. Another, severe shortcoming is the laborious confirmation procedure: for the case, that also the payee is registered to the E-commerce payment system, payment confirmation messages are sent to the payer as well to the payee via the mobile telephone network. For the case the payee is not registered to the E-commerce payment system, the payee must be directly contacted and be informed that the payer wants to send money to him. This is done by the payment system sending a Short Messaging System (SMS) message via the mobile telephone network. For executing the payment transaction, the payee has to contact the E-commerce payment system either via the Internet or via a phone call. This confirmation procedure is tedious and the additional connections further increase the cost per payment.